ECMI - Keeping up with Innovation: Designing a European Sandbox for Fintech

09 January 2019

Authors show how EU financial regulation may stifle the innovation of financial services. Using the example of automated investment advice, so-called robo-advisors, they show how a proper balance between regulatory objectives could be achieved through establishing a ‘guided’ regulatory sandbox.

In the aftermath of the 2007-09 global financial crisis, regulators in all major jurisdictions introduced significant new requirements for financial firms. Certainly justified in purpose, these regulations have increased market barriers, both directly through specific obligations, and indirectly through the sheer magnitude and complexity they involve. Regulators primarily focused on bolstering financial stability and consumer protection, while frequently disregarding their objective of promoting financial innovation. Ten years after the crisis, it is time to reconsider the appropriate balance between those objectives.

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